SaaS… The Model Choice

Software as a Service Defined

By Barb Pellow, InfoTrends

Software-as-a-Service, sometimes called on-demand software, is software that is accessed over the Internet and offered for a monthly subscription or transaction fee. This is in contrast to the traditional software business models where customers purchase a license, install the application on their own hardware, and pay recurring maintenance fees. Basically, the requirements for getting started with Software-as-a-Service are an Internet browser and a software solution.

From a graphic communications perspective, printers are trying to participate in the more lucrative marketing value chain by providing cross-media marketing communications services in addition to "ink on paper." Managers of printing companies hope that offering these new services will rejuvenate revenue growth and improve profit margins. The reality is that successful diversification is difficult to achieve due to the challenges associated with solution delivery, including developing and maintaining the IT infrastructure. Web-to-print, digital asset management, variable data printing, and integrated cross-media marketing campaign management are all offerings that graphic communications service providers are assessing in their quest for decommoditization. This is balanced with the desire for a super-efficient workflow, which enables an organization to be as cost-effective as possible.

Graphic communications firms are relying more heavily on application software solutions for all facets of their businesses. Rather than paying expensive support staffs to manage complex applications, many service providers would just as soon pay an outside organization to buy the software, maintain it, upgrade it, debug it, and ensure that it's up and running at all times. This concept, once known as the application service provider (ASP) model, has returned and is now called Software-as-a-Service.

At the Graph Expo event in early October 2010, a number of major vendors expanded their offerings to include SaaS models. Furthermore, it is clear that print service providers are beginning to understand and accept the benefits associated with SaaS business models. The resultant capabilities that print service providers can offer via SaaS solutions are expanding dramatically. During Graph Expo 2010, vendors including Pageflex, RedTie, and XMPie introduced new SaaS offerings.

The Benefits

For print service providers that are aggressively trying to transform their businesses, SaaS solutions have become the answer. The benefits are clear:

·         Lower technology, training, and operational costs: Using a SaaS model is a good way to reduce costs across the board, including those associated with hardware, software, and communications services required for IT infrastructure. The SaaS model eliminates huge upfront capital expenses. Print service providers can maximize cash flow by paying a small amount upfront and a fixed monthly fee or a transaction fee linked to usage.

·         Ease of deployment and market entry: Saas can enable a graphic communications service provider with limited or no IT department to enter new value-added services markets and ramp up quickly. The typical printer doesn’t have the human resources or the technical skills to develop and implement an IT infrastructure commensurate with today’s complex business environments. SaaS tools provide access from any desktop, seamless upgrades, and instant go-to-market capabilities. Access to experienced engineering resources dramatically accelerates time to market.

·         Scalability: With the SaaS model, graphic communications service providers can realize the benefits of scalability within their operations. SaaS enables graphic communications service providers to grow their businesses rapidly by seamlessly adding server capacity, extending the application to new geographic markets, providing as-needed bandwidth, and increasing the number of skilled professionals to support the entire application infrastructure.

·         24/7 application monitoring and management: With employees, customers, and suppliers increasingly demanding the ability to work with a company at any time of the day, there is a requirement for continuous application infrastructure monitoring and management. Most graphic communications firms are not equipped to provide seamless 24/7 operation.

·         Access to domain expertise: SaaS providers have had the opportunity to build industry expertise in the specific application sets that they support. They have been delivering a common set of application functions for a critical mass of users. In addition to technical infrastructure, print service providers will have access to industry expertise. Companies like XMPie, Pageflex, and MindFire have an application-specific concentration that they have effectively implemented with a broad range of customers. This enables print service providers to standardize their business processes based on best practices.

·         The ability to focus on core competence: In the SaaS model, print service providers don't need to worry about procuring, installing, and configuring hardware and software. The SaaS provider takes care of the infrastructure, rolls out the updates, and upgrades the applications. This model frees print service providers to focus on the value-add that can be delivered to customers.

The Bottom Line

Investing in a SaaS model enables print service providers to do what they do best—support clients with value-added communications. As print service providers build out their products and services, high-quality and reasonably-priced SaaS solutions are available. These tools can clearly help providers move into new markets with hard and soft dollar benefits. Hard-dollar benefits can be derived from the costs associated with implementation, maintenance, personnel, software licensing, and most importantly “time to market” for services that deliver increased revenues and profits. Why buy an infrastructure when you can pay for only what you use? Why buy the very latest software versions when they will be outdated in 120 days anyway? Why deal with IT issues associated with production software when you can effectively outsource? It’s time to take a look at SaaS business models.

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